Secretary testifies against Stewart

Martha Stewart altered a computer log of a phone message from her stockbroker regarding a crucial stock trade shortly after learning that authorities wanted to question her about the matter, her secretary has testified.

Ann Armstrong, who has worked for the American lifestyle tycoon since 1998, also said that Stewart almost immediately ordered her to change the message back to its original wording.

Prosecutors in the trial for alleged federal fraud and obstruction-of-justice contend that altering the message was part of a plot by Stewart and her co-defendant, former broker Peter Bacanovic, to cover up the reason for her December 2001 sale of $228,000 worth of ImClone Systems stock. The sale came a day before damaging news caused the stock to plunge.

Less than a week after changing the phone log, Stewart told federal investigators that she did not know whether there was any written record of Bacanovic's call, a Securities and Exchange Commission official said in the US District Court on Tuesday.

But Ms Armstrong said the phone message from Bacanovic came on the morning of December 27, 2001, a few hours before Stewart sold her stock. Ms Armstrong recorded the message on her computer as: "Peter Bacanovic thinks ImClone is going to start trading downward."

On January 31, 2002, after authorities had called to arrange their February 4 interview with Stewart, she asked Ms Armstrong to call up the phone log on her computer. Then Stewart sat down at Ms Armstrong's computer, something the aide said she had never seen her boss do before.

"Martha saw the message from Peter," Ms Armstrong said, "and she instantly took the mouse and she put the cursor at the end of the sentence, and she highlighted back up to the end of Peter's name, and then she started typing over that."